Estonia
The Estonian economy returned to growth in H2 2024, driven primarily by strengthening foreign demand; meanwhile domestic demand was supported by declining interest rates and rising household purchasing power. Growth in the coming years will be reinforced by making better use of production resources that have lain idle since the recession and by improved export opportunities. However, the pace of growth will be constrained by sharp fiscal consolidation, including significant tax hikes and reduced government investment. A higher indirect tax burden will keep inflation above 3.5% in 2025 and 2026, with a gradual decline anticipated from 2027 onward. The budget deficit is projected to narrow, reaching 2.7% by the end of the forecast period, supported by an improved economic outlook and lower government spending. All in all, GDP is expected to grow by 2.3% in 2025 and around 3% in 2026 and 2027. However, with the Estonian standard of living approaching the EU average, it will be increasingly challenging for the country to sustain high economic growth in the long term.
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FORECAST* |
| Main Economic Indicators | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 |
| Population, 1000 persons | 1349 | 1370 | 1360 | . | . | . |
| GDP, real change in % | 0.1 | -3.0 | -0.3 | 2.3 | 3.0 | 2.8 |
| GDP per capita (EUR at PPP) | 30350 | 30460 | 31380 | . | . | . |
| Gross industrial production, real change in % | 1.8 | -9.7 | -4.0 | . | . | . |
| Unemployment rate - LFS, in %, average | 5.6 | 6.4 | 7.5 | 7.2 | 6.8 | 6.2 |
| Average gross monthly wages, EUR | 1645 | 1832 | 1981 | . | . | . |
| Consumer prices, % p.a. | 19.4 | 9.1 | 3.7 | 3.8 | 3.2 | 2.9 |
| Fiscal balance in % of GDP | -1.1 | -2.9 | -3.2 | -3.4 | -3.0 | -2.7 |
| Public debt in % of GDP | 19.1 | 20.2 | 22.0 | . | . | . |
| Current account in % of GDP | -3.9 | -1.7 | -1.1 | -1.8 | -1.6 | -1.2 |
| FDI inflow, EUR m | 1921 | 4962 | -3262 | . | . | . |
| Gross external debt in % of GDP | 84.4 | 89.2 | 98.8 | . | . | . |
Basic data are continuously updated.
* Forecasts are changed beginning of January, April, July and November.
See Press Conferences.
publication_icon
Monthly Report No. 1/2025
Vasily Astrov, Alexandra Bykova, Selena Duraković, Meryem Gökten, Richard Grieveson, Maciej J. Grodzicki, Doris Hanzl-Weiss, Gabor Hunya, Branimir Jovanović, Niko Korpar, Dzmitry Kruk, Sebastian Leitner, Isilda Mara, Emilia Penkova-Pearson, Olga Pindyuk, Sandor Richter, Marko Sošić, Bernd Christoph Ströhm and Maryna Tverdostup
wiiw Monthly Report No. 1, January 2025
50 pages including 6 Tables and 13 Figures
Details
publication_icon
Executive summary
Olga Pindyuk
in: The Crisis is Over, but its Scarring Effects are Hindering Recovery
wiiw Forecast Report No. Spring 2024, April 2024 , pp. I-VII
Details
The Estonian economy returned to growth in H2 2024, driven primarily by strengthening foreign demand; meanwhile domestic demand was supported by declining interest rates and rising household purchasing power. Growth in the coming years will be reinforced by making better use of production resources that have lain idle since the recession and by improved export opportunities. However, the pace of growth will be constrained by sharp fiscal consolidation, including significant tax hikes and reduced government investment. A higher indirect tax burden will keep inflation above 3.5% in 2025 and 2026, with a gradual decline anticipated from 2027 onward. The budget deficit is projected to narrow, reaching 2.7% by the end of the forecast period, supported by an improved economic outlook and lower government spending. All in all, GDP is expected to grow by 2.3% in 2025 and around 3% in 2026 and 2027. However, with the Estonian standard of living approaching the EU average, it will be increasingly challenging for the country to sustain high economic growth in the long term.
